Are Freelancers Really Business Owners?

I just completed a great podcast interview with Collis Ta’eed from the NorthxEast blog, although the focus was not on that blog, it was on his newer blog, Freelance Switch. Freelance Switch is all about freelancing and skyrocketed in popularity in a matter of weeks, nearing 4000 RSS readers at one point – not bad for a three week old blog!

We talked about how he managed to grow the traffic to his blog so quickly and it turned out to be a very good interview with lots of cutting edge blog traffic tips. I’m only releasing the podcast to my Blog Mastermind members (sorry readers – I do have to have something premium for my members), so if you want to hear the full interview you better be on the early notification list to get into the mentoring program.

After talking with Collis and his success with a blog about freelancing I started thinking more about the whole freelance industry. I suspect there are quite a few freelancers who read Entrepreneurs-Journey.com given that working as a freelancer is often considered running a business. Personally I have never wanted to be a freelancer, although I have certainly worked from time to time on freelance projects, especially during the days when I ran a web hosting company.

What Is A Freelancer?

Freelancers, as far as I understand it, are individuals – talented creative types usually – who chose not to seek permanent employment with a single company but instead take on contract projects working for many different businesses.

The idea is that by not committing to a full time job you gain some semblance of freedom and more control over your working lifestyle and income. You take on only as many projects as you need/want to, you can work from home and you don’t have any boss telling you what to do.

That all sounds good, but is freelancing really the best option if you are looking to improve your working lifestyle?

Freelancers as Small Business Owners

The book the E-Myth is very successful because so many people start small businesses thinking it leads to freedom, only to discover that they have created a situation of self employment, which is potentially worse than being employed by someone else. The E-Myth debunks the “myth” that self employment is entrepreneurship and that owning a successful business is not equal to self employment.

When you leave your job to begin freelancing no longer do you have a guaranteed income. Money only comes if you land clients, if you fulfill their needs and if they finally get around to paying you. As I outlined in one of my original pillar articles – Do You Want to Run Your Own Business? Read this First! – you don’t get paid holiday or sick leave, no retirement fund and you may work twice as many hours just to meet your previous income level when you had a job.

You are no longer a person who *just* has to be good at their job, you also have to find a way to be a bookkeeper, a salesperson, a manager, a technology expert and a host of other small business functions.

The Freelancer Myth

Freelancing as a career sounds great and I have to admit I feel a sense of romanticism that comes with that title (think poets, musicians, writers and artists, who all can be freelancers). Freelancers are very creative individuals with a unique talent and a desire for freedom. Unfortunately that one talent can be stifled when the person who possess it has to focus energy on other tasks. I suspect if we didn’t need money to live, many freelancers would indulge in their craft purely for pleasure.

Freelancers, just like any self employed individual, must aim to become true business owners. By establishing business systems that actually grant freedom – real freedom – you can move away from self employment and spend the majority of your time focusing on creative output. That’s when you make the magic happen, when your output is outstanding and when you enjoy work – and life – the most.

Business systematization is a topic I have discussed many times in this blog and you will find a lot of content in my archives that is relevant to moving towards true business ownership.

Look to the following tactics and strategies to move towards business freedom:

Think about what you are good at and how much time you currently spend on these activities

Determine what tasks are stopping you from doing what you are good at and make a list of the “impeding” activities

Find ways to outsource, eliminate or employ someone to handle the tasks or ways minimize the amount of time you devote to the impeding activities

Realize the activities that create the most value for you and increase the time spent on these activities (learn about the 80/20 rule)

Determine what your true motivations are when it comes to income, labor and lifestyle – are your current activities congruent with meeting these goals?

Let the experts do the jobs that require expertise – if you are not an accountant, a web programmer, a graphics designer, a writer, an “insert expert here” then don’t try to become one, hire one instead!

Don’t be afraid to say no to projects you can’t do or are not well matched to what you are good at

Get a mentor and seek consultation if you can’t move past a certain roadblock

And if all else fails in the end, going back to a job is not something to be ashamed of if you find freelancing is not your cup of tea – there is nothing wrong with experimenting in life

So how many freelancers are reading this? What do you do? Are you building a business or are you acting like a self employed nutcase? 🙂

16 Comments

What a timely post! I’ve been trying to make my freelancing become a real business by working on those impeding activities via outsourcing and all. Although I haven’t reached that level of getting confident enough with the current status of my freelancing/business, I’m struggling to get there.

I also must admit to being pleasantly surprised by the timeliness of this post for me too!

Here’s a question I have been thinking a lot about lately…

How do internet entrepreneurs effectively incorporate “freelance-type” activities into their sales funnels?

Consulting is a common example. If a person runs a website about fitness and then sells information products at a variety of price points, wouldn’t the top backend product be personal consulting and/or coaching?

Although that backend product requires direct time, the entrepreneur can charge unbelievably high rates to attract the best clientele and automatically turn anyone else back to the lower-end products.

As my health prevents me to go back to work (like godhn) and my intentions was *not* to go back to ‘freelance writing’ full-time, I came back online with a new time management system that I keep too verbatim. I try to freelance only 20% of my time, as I work on my online biz.

I think what Yaro does is a system I try hard to emulate, Jason. As my goal is to ultimately unveil a membership mentoring program, and infoproducts (audios, ebooks, video-clips) can be packaged and resold to share “how-to” do things within your freelance work, rather than doing the freelance work. You also get more serious clientele, willing to pay for your services at premium rates, etc.

I think Yaro’s sales funnel is great for info products, but it’s actually a little bit different for service based items (ie: freelancing).

We use the sales funnel to track how close the prospects are to making a purchase. For example, they might go from “Qualification” to “Needs Analysis” to “Proposal” to “Negotiation” to “Informal Respose” to “Closed”.

It’s not about upselling but it’s making sure that the prospect is 1) either moving through the sales funnel or 2) taken out of the sales funnel. We found it to be one of the best ways to minimize our time on prospects who aren’t going to become clients – sort of adhering to the 80/20 rule.

Now, once we sell the client and deliver the service, we often create a campaign to offer other services. For example, if you do site designs, you might then offer to create a newsletter, a shopping cart, SEO, PPC, etc.

So once you sell the client and deliver the service, you move them out of your sales funnel into an “upsell” funnel. And in that case, you can start offerring the services you have. It’s just a little different from info products because different clients have different needs. It’s much harder to automate like info products are.

If you add a high-end consulting/coaching service to your sales funnel then yes, that is not a passive income activity, but it’s probably something you don’t mind doing because the pay is more than adequate being at the back end.

Most experts are not in it just for the money, they actually enjoy working with people and helping others.

The thing to realize is that at some point you will no longer want to take on any personal work and focus on pure passive income.

With that in mind a freelancer needs to either create products instead of sell services or hire other freelancers/businesses to provide the services.

The problem with hiring is you then move away from doing the work to project managing the work, which is something else you could outsource, but we are talking about an ever increasing need for more people and HR costs and you may not have the margins to cover this extra expense.

I prefer the products path myself, but for the time being I’m very keen to consult too so I can gather more market intelligence and learn what the specific problems of my clients are.

Also, it’s important to consider asset value when going through this process. Creating products in a sales funnel that runs without you personally providing any expertise (a sales funnel still requires people for customer service, technology etc, but these roles are easier to outsource than an expertise based skill like consulting) means you create a sellable asset.

What you want ideally is a system that is not dependent on your personal input to create profits. Once you have that you can keep consulting personally if you want to, but you also have an exit strategy.

The less systems you have in place the less valuable your business is and this is a lesson that applies equally to freelancers.

I’ve never been a freelancer myself and i completely agree with the comment you made saying “hiring experts”… that is a universal truth but a lot of people with the “freelance mentality” usually think that they can “Do it all themselves.” There is no harm in asking for help i’ve found. Besides you can only be great at so many things so why suffer with the majority of things you really cannot do well enough?

I am a graphic design and applied arts student trying to figure out how to make a living when I leave school in 18 months. I have applied just a few of your techniques to my blog and although I’ve only had it a few weeks, and it is in an obscure super-niche I have seen steady traffic growth. I appreciate the gift of information you have provided and can’t wait till you release Blog Mastermind subscriptions.cheers Gregg

I am a self taught web designer and freelance writer. Thank you for posting this. I am currently reading a book about starting and running a web design business and the writer made the same point about contracting out work so you can focus on your primary objective(s).

I admit that I’m one of those freelancers with the “Do it all myself” mentality (lol). However I’m quickly getting over this as it is taking me away from those things I really want to do which is write and design. Thanks for the wonderful information you provide in this blog, Yaro.

Yaro, I would say freelancing is a business. You have to provide a service and makes sales. As a college student I started freelancing to have income to support myself through college. the life of a freelancer is rewarding and challenging in many ways.